Wednesday, July 31, 2013

Analytics: Sales Representative Profitability 2

Continuing with concepts related to salesforce profitability and how the analysis can lead to key decisions for small business owners.  Trending salesperson profitability over time whether it is monthly or quarterly can also enable key decisions.  

Seasonality is something that most business naturally observe, but through the lense of salesperson profitability a business owner can identify discounting rules or plan strategic time off.  For example, if there is a time when sales rep profitability dips and inventories are becoming low, then it may be a good time to conduct training or switch the sales focus to other higher margin products and services.  
Blending a salesperson’s tenure with your profitability analysis can also uncover insight.  Say you have two sales reps one that has been with you for 10 years and another that has just signed on this year.  The former sales rep is an expert in the industry and know just the discount a customer will pay for a product.  The newer sales rep on the other hand, may be taking a different approach while learning the market. Overtime, you will probably observe that salesperson profitability for you seasoned rep consistent and predictable.  

On the other hand, you may be looking for the profitability of the new rep to grow over time.  But what if the profitability of your new salesperson is outpacing that of your seasoned representative?  You may want to see if your seasoned representative has grown complacent and is used to providing deeper discounts than necessary.  Or if the new market discovered by your other representative is a sign of changing overall market conditions. The analysis then pays off.

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